I know we all like to latch onto specific buzz works like the "Public Option" and get up in arms with every tweet from a Washington pundit. But we may be not be seeing the forest from the trees. Well, there was a possibly huge little nugget in the AP story that would equate to 'real reform' - whatever that means.
"The deal reached Tuesday puts even more requirements on insurers by requiring that 90 percent of premium dollars be spent on medical benefits, as opposed to administrative costs, officials said."
AP Story
If you want a bit of perspective on how big that is, consider this:
"USA wastes more on health care bureaucracy than it would cost to provide health care to all of the uninsured"
Health Care Bureaucracy Article
"The participation of private insurers raises administrative costs. The small private insurance sectors in Australia, Canada, Germany, and the Netherlands all have high overheads: 15.8%, 13.2%, 20.4% and 10.4% respectively, far higher than the 1% to 4% overhead of public insurance programs."
MassCare Article
"Medicare, the publicly managed plan for the elderly in the United States, spends 5 percent of each health care dollar on administrative expenses, compared with the 17 percent devoured by private insurers on average. "
10% is a huge number, folks. This would dramatically effect the way health insurers do business. There would be a huge new focus on efficiency in customer care. Payment systems would need to be revolutionized. Underwriting will be going away all together with guaranteed issue, so that's an immediate savings.
This will lower total medical costs for everyone folks. And it's bigger news that the small fragment public option ever was.
UPDATE: Many are pointing out that since the insurance companies are not upset yet, that it's not a big deal. Well, it's a brand new number and provision. They are starting.
Don't stop digging into the details folks. These under-reported details may be more important.
If you combine this with the Wyden Amendment, there is a great deal of focus on price competition.
Another important provision would be importation of Canadian drugs. That's an item that could really control costs for average people.